Question: Will social networking ever find a working business plan?
Jimmy Wales: That’s a good question. I mean, I guess, you know, in large part we’re talking about Facebook when we’re talking about looking for the magic bullet sort of business plan. On the other hand, I don’t know if Facebook is profitable, I don’t know if they announced that or not, but I know they’re bringing in quite a large amount of money, and they spend it all on trying to make the site better. So I’m not so sure that they need a magic bullet in order to survive. Whether they can become sort of huge like Google. I don’t know. One of the interesting things about social networking is that it is very different from search in that there’re obvious and very explicit network externalities that you need to be on a certain social network, because all your friends are there. And to move from that to another social network requires either abandoning your friends, or convincing them to come with you. It’s non-trivial. As opposed to if I find a better search engine, I just switch my browser’s default homepage and there I go, I’m off to the races on the new search engine. SO I think that’s incredibly valuable from a business perspective. From a consumer perspective, it’s something I would be concerned about. That we all got locked into Microsoft for a long time, and lots of people still are, because of those same kinds of network externalities. I needed a Windows computer, because all my friends had a Windows computer. And that’s a problem. That’s diminished over time, now. I have also changed friends, so now I need an Apple computer, because all my friends have an Apple computer. But the-- I think in the end, you know, we can look at something like MySpace, where there’re just-- I don’t know, in my opinion, they’re just milking it for money right now. I mean, they monetize it like crazy! There’s tons of ads all over it. The whole site’s quite annoying. Maybe I’m just too old to appreciate MySpace. I don’t know, but I think there’re some interesting questions. As far as some interesting and amazing new business models for Facebook, I don’t really see it, but what I do see is they’ve got all this valuable demographic data. One of the things that we know is valuable for both advertisers and consumers is relevancy. Certainly, right now Facebook does not particularly show me particularly relevant ads when they do show me ads, so I can’t think they’re performing very well. But they’re getting better at that. I mean, they’re getting a lot better of sort of allowing people to figure out who it is that they want to talk to, and who is it that’s receptive to their message, and then showing those ads. And if they can do that, I think they’ll be very successful.
Recorded on: 04/30/2008
Discuss
ben leefield on June 6, 2008, 5:36 AM
I don%u2019t think Jimmy mentions the social graph. Personally I think the magic bullet for social networking sites is in connecting people and for people being able to see the social graph %u2013 ie how people are connected to one another, either so they can connect themselves for business or pleasure or merely just to people watch. It%u2019s a concept that Mark Zuckerberg talks about a lot, but I think that Facebook%u2019s achilles heel is that the social graph for Facebook users only extends to whoever is on Facebook %u2013 because it%u2019s a walled garden.
The social graph is the killer application / magic bullet, because it documents human relationships and allows people access to more of them. Apart from the obvious business need to understand the relationships that form the basic building block of society, people have an endless fascination with other people, who they either love or hate or hopefully some measure in between. They (& I) use this information not only to understand the world they occupy and to connect with other people but, just as importantly, they use the information to define themselves. In the good old days (I don%u2019t believe it), most people rarely left their villages and their access to information was limited %u2013 they therefore defined themselves (and therefore their position in society) by the people immediately around them. Now people, at least those with internet (and other media) access can define themselves globally, and they can use the internet to re-determine that definition whenever they want. Of course, the social graph killer application probably has to be allied to online advertising in order to make it sustainable!
I%u2019m seriously impressed though by Jimmy%u2019s attitude to out and out commercial sites like Facebook %u2013 I suppose I thought that, given Wikipedia, he would be slightly anti-commercial in nature, but I was obviously completely wrong!
Ben Leefield
CEO
WikiWorldBook
ben leefield on June 6, 2008, 9:36 AM
I don%u2019t think Jimmy mentions the social graph. Personally I think the magic bullet for social networking sites is in connecting people and for people being able to see the social graph %u2013 ie how people are connected to one another, either so they can connect themselves for business or pleasure or merely just to people watch. It%u2019s a concept that Mark Zuckerberg talks about a lot, but I think that Facebook%u2019s achilles heel is that the social graph for Facebook users only extends to whoever is on Facebook %u2013 because it%u2019s a walled garden.
The social graph is the killer application / magic bullet, because it documents human relationships and allows people access to more of them. Apart from the obvious business need to understand the relationships that form the basic building block of society, people have an endless fascination with other people, who they either love or hate or hopefully some measure in between. They (& I) use this information not only to understand the world they occupy and to connect with other people but, just as importantly, they use the information to define themselves. In the good old days (I don%u2019t believe it), most people rarely left their villages and their access to information was limited %u2013 they therefore defined themselves (and therefore their position in society) by the people immediately around them. Now people, at least those with internet (and other media) access can define themselves globally, and they can use the internet to re-determine that definition whenever they want. Of course, the social graph killer application probably has to be allied to online advertising in order to make it sustainable!
I%u2019m seriously impressed though by Jimmy%u2019s attitude to out and out commercial sites like Facebook %u2013 I suppose I thought that, given Wikipedia, he would be slightly anti-commercial in nature, but I was obviously completely wrong!
Ben Leefield
CEO
WikiWorldBook
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